SHEARWATER CAPITAL

In constructing our client portfolios, we rely primarily on DFA funds, for both equity and fixed income securities. While most of our clients understand the value of DFA stock funds, we sometimes get requests for individual bonds, in place of bond funds. This is usually based on the fact that individual bonds can be held to maturity if interest rates rise, thereby assuring repayment of the bond’s face value, or principal. While this strategy seems reasonable at first glance,

With interest rates near historical lows, many investors are concerned about their fixed income investments. Not only are bonds offering meager returns, but an increase in prevailing interest rates could cause them to lose value. In evaluating your fixed income holdings, it may be helpful to consider the following principles. Interest Rate Movements are Unpredictable Academic research has shown that interest rate movements are difficult to predict. Forecasts by leading econom